Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for July, 2011

I have been somewhat surprised by the number of emails and comments talking about the fact that Deputy Iris Varela was named Minister for Prisons or whatever name that new Ministry was given.

But really, does it really matter?

The fact that Ms. Varela has no managing experience is simply a continuation of a long chain of Ministers with similar non-qualifications. About the only requirement to be Minister under Chavez is that you are loyal. I mean, a guy who seeks treatment for a life-threatening disease with the least competent possibility, can not truly believe in expertise.

Take über Minister Jorge Giordani, he has a Bachelors in Electrical Engineering, a Ph.D. in Urban Planning and now he is Minister of Planning and Minister of Finance, is on the Board of the Central Bank and PDVSA. For only a brief time during Chavez’ tenure, Giordani has not been in charge of Economic Planning in the country. During this period, inflation is close to 1000% and except that one is not allowed to quote the parallel rate, devaluation has also been in that same range. Giordani has tried everything an has been unable to reduce inflation, reduce debt, control liquidity. He ha no idea on what needs to be done, but he keeps chugging along.

It seems to be the same everywhere, Setty has told us recently about the wonderful plans to increase oil production under Rafael Ramirez, while Cronicas de Caracas told us about the Minister of Sports that wants to pass a Bill that will likely destroy professional sports in Venezuela and we are not even sure the guy ever graduated from the University. But we are sure Vice-President Jaua did, even if it took him 15 (or was it 20?) years to do it. Oh yeah! Minister Garces has a Ph.D., which he obtained in 2007, he never even proved he could research, let alone manage a group, or a Minsitry and his expertise has little to do with being Minister of Transport and Communications.

So, should I really care about Iris Varela being named Minister for Prisons? Not really. Would she recognize a human right if she saw one? Ask Cesar Perez Vivas. Today she says very nonchalantly that 20,000 of the 45,000 prisoners in the country “have all the legal conditions to be out of jail”. She talks as if she was an extra-terrestrial who just landed in Venezuela to solve the prison problem, not an integral part of the Government which has allowed this “small” illegality to exist. I mean, the same people who have ignored for twelve years the crime problem, all of a sudden realize there are 20,000 people in jail who should legally be free. She proves it today when she says: If a Judge does not obey me, I just ask the Chief Justice to remove him. This is Varela’s concept of “Justice” tp say nothing of the absence of room for criticism in the revolution.

And her goal? To shut down jails. Really, and where does she plan to put the 30,000 remaining prisoners who are currently in jails designed for about 15,000 prisoners at most?

In the end, it really does not matter. Know how, knowledge, ability, management are simply non existing concepts in the revolution. Just to prove it, look up PDVSA’s financials in the company’s webpage. Don’t look at revenues, don’t look at earnings, don’t look at production. Simply go to point g) on page 14. There under the heading “Research and Development” you will see the progression of expenses for this very important (to me!) item:

2008 $555 million

2009 $276 million

2010 $188 million

To me that says it all about the role of knowledge and know-how in the Chavez revolution. As a General told me ominously a few years ago: “If Chavez can Be President, why not me?”

With oil at almost US$ 100 per barrel, the insatiable revolution announced today the largest bond issue in its history at US$ 4.2 billion (It increases the total debt issued by the Republic by 14%), with a coupon of 11.95%, maturing in 2031, but with amortizations (partial payments of one third) ion 2029 and 2030. The total cost in interest will be over US$ 9.5 billion over the life of the bond.The bond will only be sold locally in exchange for Bolivars, but will only trade in foreign currency like has become the norm in the last few years.

The bond is being used by the Government mostly to supply dollars to importers as a number of items or showing scarcity due to the difficulty of obtaining foreign currency from the exchange control office CADIVI. But part of it will be for capital flight as investors and companies simply buy the bonds to obtain dollars with Bolivars at a cheap rate.

This bond “should” yield around 13% in the international markets, which would require it to trade at around 90%, something which will not happen initially as most buyers sell the bonds immediately flooding the market with bonds and pushing the price down.Today the bond was trading in the informal market at 83%, still high in my mind, where it yields 14.4%. If you can sell it there you would have paid Bs. 4.3 for each US$ and received 83 cents (83%), which implies that each dollar would cost you Bs. 5.18 (4.3/0.83). In the worst case scenario of a price of 76%, the equivalent would be Bs. 5.65, this is very cheap and irrational, but that is what the Government is doing.

Thus, it is a good deal to buy the bonds locally and if the “when and if” drops some, it will also be worth it to buy in foreign currency. The Government is giving away money for the sake of preserving an artificial foreign exchange system. Take it if you can. At the current 83% price other bonds with better current yield to maturity may be more interesting for you, unless you want to play Venezuela medium and longer term in the belief that there will be change. In that case, the 2031 may be a better choice than others.

As someone told me yesterday, this is crazy, the worst part is that many Venezuelans rejoice because they will be able to buy this bond. But we will all pay for it one day.

I find it amazing how little written speculation there is about Venezuela’s future. All of the roads to the December 2012 election are routine, normal, ordinary. As if Chavez’ illness had not been an incredible attempt at black swanning us. But given the magnitude of the surprise, I think it is time to be what scientists call “orthogonal”, thinking outside the box. Imagine for one moment it is April 1993, Oswaldo Alvarez Paz just won the primary, he will be the next President of Venezuela, which did not happen, a dark horse called Rafael Caldera came back to the country in July of the same year and took it all. Or think 1998, Irene Saez leading the pack in April of that same year, Hugo Chavez a lone traveler with less than 5% of the preferences, another dark horse that came and won.

In that spirit, seventeen months before, not eight like in those cases, here is my fantasy, trying to really think out of the box, let’s call it:

Henri I, President of Venezuela

As I sit here being sworn in as the next President of Venezuela, hand raised in the Capitol building of Caracas, I can’t help but think of the circumstances that took me here. Who would have ever imagined I would get here in such a convoluted and random way. But I guess that persistence pays off in politics. Three years ago I was dead for Presidential politics in Venezuela, today, I stand here. Amazing!

But to understand how I got here, you have to go back to June 2011, I was trying to fend off corruption charges at the time, working the contacts, when all of a sudden we learned that Hugo had cancer. To this date, we have no idea what he had or has. All we know is that he went on a pilgrimage from Havana to Sao Paulo, looking thinner, saying he was better, cancer free and ready for Patria and Socialismo, but not for muerte. And we believed him.

Meanwhile the LODO association, also known as the MUD, went about its business, selecting a candidate in February 2012. It was a tight race, Maria Corina really poured it on, Viene Maria and Maria Corina Nos Quiere Governar signs seeded Venezuela. Even Chavista outposts in the most remote regions of Venezuela had the signs.

Meanwhile, Leopoldo Lopez tried to jump into the race, but even if the CIDH ruled in his favor, Tibisay from the Electoral Board, the CNE, said CIDH was a four letter word in her dictionary. Thus, Leopoldo was left with his curls ready for the race (get it? crespos hechos). But nothing doing, Tibisay dixit.

Thus, neither the virginal, nor the resuscitated managed to dislodge Henrique Capriles from the front running position he held since late 2010. Thanks to the Government trying to ban him, a positive image in Miranda and a well run campaign, Capriles benefited from the voters desire not to lose, getting 45% of the vote in the six man (or mixed) primary race, as Venezuelans were getting ready to enjoy their Carnival 2012 vacation. The race was now well defined, it would be a Chavez versus Capriles race and the only question was how good the President’s health would be to manage a full court press and campaign against Capriles.

But it was not to be.

As Capriles’ lead versus Chavez began to whither in May 2012, it became clear that Chavez himself was withering in the toxicity of his cancer treatment. It turned out that since March 2012, his closest advisers, including Fidel, Maradona the Chief Babalao and Adan were telling Hugo that he would not be able to campaign. But Hugo was being Hugo and refused to acknowledge the obvious until May. By then Hugo could barely speak for ten minutes at a time in public, was thin and the electorate was doubting his capabilities as a now or future President.

Given that Chavez had led a politically charmed life up to that point, he figured he could listen to his closest electoral advisers, Fidel, Adan and the General, none of which ironically actually believed in elections. But advised they did and it was unanimous, name brother Adan as Candidate, the true Communist in the family, another Chavez, the one that showed you the way, and then, when you recover, you could come back to being President in 2018 and let Adan warm the Presidential chair for you.

Knowing that there was no love lost for Adan Chavez within the PSUV party, I immediately gathered my advisers and within a week announced my candidacy to the Presidency as an alternative and openly welcomed anyone within PSUV to follow me. I told them all: I am the continuity of the revolution, there is no Chavismo without Chavez, but the route towards socialism flows through me. The opposition killed me, accused me, insulted me, but I am used to that, I had a plan.

Within weeks, it was clear that Adan’s candidacy was falling off a cliff at my expense. Capriles and the opposition continued ahead with 40% of the vote intention, I had 30% and Adan was dropping below 15%. It was an amazing turn of events.

By September, Hugo Chavez, fearful of losing it all, decided to have Adan drop out of the race. Adan argued health problems to withdraw and was replaced by then Vice-President Nicolas Maduro, with Jose Vicente moving into that position.

It was simply too late. Maduro gained four points for PSUV the first week, but began dropping soon after that. By the end of October, Maduro had 10%, Capriles had 45% and I had 35%, with 10% undecided. On November 15th. Maduro withdrew from the race with PSUV giving me all their votes. We had a little pop in popularity and on Dec. 2nd. 2012 I was elected by the smallest of margins with 51% of the vote versus 48% for Capriles.

And here I stand being in the podium, my hand raised:

“I, Henri José Falcón Fuentes, swear in front of God and the Fatherland…

Luisa Estella Morales is truly a piece of cake. She spews BS like there is no end to it. After the Supreme Court accepted the case to ban leading opposition candidate Herique Capriles on trumped up corruption charges, she swiftly turned around and discarded the case because the accused misrepresented himself when presenting the case as holding a certain position in Chavez’ PSUV case.

Talk about a silly technicality with no legal basis.

But I guess Luisa Estella, who was removed from the bench, not once, but twice, which apparently qualified her to be Chief Justice of the Venezuelan Supreme Court under Chavez, thinks she is on a roll in trying to fool us, and she is trying it once more. Maybe she is right and we are indeed idiots, after all look at what job she holds. Here is the story:

Chavez’ Government approved a Bill imposing a salary cap on public servants. Supreme Court Justices who made at least US$ 7,000 a month, something like 20 times a year, were among those most affected by the decision as their salary would have to roll back to Bs. 12,000. But in their infinite creativity, the Court implemented a food card of Bs. 10,000 for all Justices, around seven times the minimum salary, to complement the “capped” salary of Bs. 12,000.

Except it leaked to the press, not via a leak, or as she calls it, “It was taken to the press in an inaccurate fashion”, but the simple fact that one of the members of the Court (see two posts ago), Blanca Marmol de Leon, rejected the food tickets, because it was undignified and illegal. Marmol de Leon said that this was a “fraud of the law” and it was a way to look for “alternate routes”. Marmol de Leon also said that at least four Justices had rejected the food tickets. I hope we learn who, those guys should stay in the Court, whenever the not so revolutionary “Justices” are swept out of the Court.

And indeed, Luisa Estella confirms, Marmol de Leon’s “alternate route” theory, when she says: “The Court will undertake an extensive review, from a legal point of view”.

Jeez, I thought that was what they did all the time; look at things exhaustively from a legal (and supreme) point of view.

But since she is ready to assume we are stupid, she said: “It is not a bonus, it is not a food ticket, it is for our expense account”

I guess someone has to pay for lunch when they go meet with the party hacks who tell them how to rule and sentence in their cases.

And in closing, she tells that she hopes the “people” will not have an erroneous vision and distorted view of the Justices.

And as is usually the case from a Government that knows how to destroy value, but is clueless as to how to go about to creating it, at least two of the areperas are confirmed closed by now, including the main one that Chavez inaugurated:

This follows in the path of Chavez’ Ruta de La Empanada or his Vertical Chicken Coop Projects, to say nothing of more important things like cement, steel or oil projects.

The sign says they will “relaunch” it, another wasteful and useless overhaul in the country of interventions, overhauls and re-powering of everything damaged or destroyed under the revolutionary sun. Hopefully, this wil not get byond that sign this time around.

Note added: Sabio Sapiosetty tells us in the comments they moved the arepera to a truck in front. I wonder what happened to all the infrastructure in the store and I hope the truck does not get stolen.

A week ago, there was an interview with Supreme Court Justice Blanca Marmol de Leon in El Nacional, which shows, from within, how distorted and dysfunctional the Venezuelan system of Justice is. Some excerpts:

Thirty six years ago one of her clients told her “I had to pay to sleep on the stairs of Catia Prison. Three decades later, the variety of businesses in our prisons has become more sophisticated, to the point of what we have seen in the Rodeo prison: a prison governed by the inmates and some authorities unable to regain control. ”
Marmol Leon said that the primary responsibility for the prison crisis is that of the Executive Branch: “Even if the criminal courts act swiftly to avoid procedural delays, it is in their power to prevent the risk of dying from the extreme violence in Venezuelan prisons .

For example, if the judge orders the transfer of a prisoner to court, but there is no transport, his hands are tied. The diagnoses have been around for a long time, what is needed is consistent decisions on the part of the government. ”

Marmol Leon ads: Rocío San Miguel had been advised of the possibility of prisoners escaping from El Rodeo, particularly the promoters of the riot. At the end there are many questions we do not know, like how many died or how many escaped.

How could prisoners escape from from El Rodeo if the area was cordoned off? How is it that only now they have realized that dozens of prisoners were eligible to be released? The criminal court judges do not know if when we condemn a man to three months in jail, we are condemning him to death, because in Venezuela prison is a death sentence at random.

Sentencing judges could be moved to prisons in order to streamline processes. We can not forget that most Venezuelan judges are afraid. Repeating what was said by Couture, the Uruguayan jurist: In a country where judges are afraid, the people can not sleep. In Venezuela, no one can sleep peacefully and those that do, it is because they have not thought about the severity of deterioration in the administration of justice, because they have not noticed that if there are fearful judges who are eager to please those hold political and economic power, all citizens are in danger of imprisonment and death.

No citizen in Venezuela has the assurance that a judge will respect their rights. Remember that if a judge agrees to the freedom of a person the government wants to maintain he can be removed and even imprisoned, as happened to Judge Maria Lourdes Afiuni. Most judges ado not have the professional or ethical strength to administer justice, and they do not hesitate to give up the freedom of a person in exchange for their tenure as Judges.

On the regression of Venezuela’s judicial system in the last few years:

The involution is such that the presidents of the criminal judicial circuits are instructed to tell the judges how to decide the cases.

And then when she is asked where these instructions come from, she says:

From the Supreme Court. So I’ve been told.

If there is no independent judiciary, there can be no rule of law. I is impossible. There is no rule of law because there is no autonomy and independence of public powers, which is essential in a democracy. In Venezuela we have less democracy because we have fewer independent judges.

What can we expect from the judges if the majority of Supreme Court judges admit that they are politically engaged with the government? The highest authorities of the judiciary can not be committed to any government or with any political ideology.

I just saw the sentence against Oswaldo Alvarez Paz. The goal is to criminalize dissent.

The authorities of the Supreme Court proclaimed socialist ethics, but the salary is increased by a bonus of food, apparently, outside the law. I think the Emoluments Act is unconstitutional, but is in effect and we must comply it. Our salary was reduced to 12,000 Bolivars per month and that this resulted in absurd situations. For example, an assistant judge earns more than a judge and a retired judge earns more than an active one.

On her salary before it was cut:

A basic salary of 30,000Bolivars (about US$ 7,000) and a premium for experience.

Compassion. If there is a single word I would ask from a Government, it is that, compassion. Sounds simple, but a Government that shows compassion, has it easy after that. Everything follows down from it. From being practical, to human rights, to trying to do what it is best for the people, it only takes one word: COMPASSION.

And Chavez, trapped in the labyrinth of his illness, showed he had none, whether he was talking about political prisoners or not. And neither did the General Prosecutor or the President of the Venezuelan Supreme Court.

For Chavez, this was not about responding perhaps to his buddy’s Chomsky request for compassion with another intromission with the judicial power. No, he could have, for example, pardoned those involved, he was pardoned and he had over two hundred deaths on his back, after the ’92 coup. Thus he knows exactly what it means. But pardoning anyone has never been part of his Presidency, he has shown no compassion, for friends and foe alike, even for his daughter’s Godfather. On the contrary, he has shown a remarkable thirst for revenge.

Bur rather than call for expediency in having those ill be given conditional freedom to get treatment, Chavez could have raised hell because under his rule, under the Government he has presided for over twelve years, prisoners, whether political or not, should be allowed to seek medical treatment. Because, even when this is allowed, a member of the Venezuelan Supreme Court tells us, that there are no resources to provide the transportation. So, prisoners are stuck in revolutionary hell, they are usually not allowed to seek treatment, and if they are, there are no resources to guarantee safe transport for them. Thus, the choice is simple, let them sink in the hell of their prison and the hell of their illnes and the which Venezuela has become.

Because clearly, if there is no compassion from the “leader”, there will be nothing from those below.

Like the General Prosecutor, who “proposes” to create a “commission” to analyze what benefits may or not be given to prisoners (Did she really say “political prisoners”, how political incorrect can she be?). How long will this “commission” take to analyze? How long will they take to decide?

Contrast that with the speed and resources devoted to treating, curing and saving a single patient, their own demi-God and benefactor: Hugo Chavez Frias.

Where was this person been since she became General Prosecutor three years ago? Did she even know this was a problem, or did she simply not care? Is she proud of the disastrous prison system that she presides over, as the person in control of who gets accused or not?

No, she simply lacks compassion…

The same way that the President of the Venezuelan Supreme Court dares to say she is “reviewing” the files of those prisoners who are sick, because the Dictator, or her Dictator, Hugo Chavez asked?

As President of the Court, she should understand what system she presides over and ask for both Justice and compassion for all Venezuelans. But she was too busy, approving for herself and buddies in the Court, some six to seven times the minimum salary in monthly food tickets to bypass Chavez’ law which caps salaries at all levels of Government. These salaried revolutionaries are certainly a piece of work, worried about their rich bellies, but not about the revolution and the moral ideals iclaims to stand for.

And finally we ask, since we talk about compassion and the protection of the people. Where the hell is the “People’s Ombudsman”? This position was created precisely to have an independent body that would watch out for the average Venezuelan. To ask that their rights be respected, including all of those rights contemplated in the Bolivarian Constitution of 2000. This is Chavez’ creation, where is she?

I have no idea, but I know she does not have the most basic belief and instinct she needs in her job: Compassion.

The problem with the Chavista revolution is that while all of its wishes, deeds and resources are being overwhelmingly directed to the preservation of their leaders’ health, the revolution has been shown, once again, to not have the most basic elements of compassion to lead Venezuelans anywhere.

When I first wrote on May 29th. that Chaves did not really have a knee problem, I did this, because someone who has always provided me with good information called me to tell me he had something worse, without being specific. This person said that a few people knew about it, but nobody dared say anything, so I wrote a somewhat sarcastic post on the subject. Little did I know how fast things would move in the next month…

But we still don’t know what Chavez has and when was it that they realized he was sick. To attempt to shed some light on this, I have gone back and looked at Chavez’s pictures using one of his rags as the main source (Correo del Orinoco, Eva’s rag) and have added some more pics chronologically, including pictures from the videos to get an idea of the evolution of Chavez’ face and body until today.

One can clearly see the evolution in his weight and face, but it is not always clear, in fact, I think some picrures puported to be from the day before, were older. But I will let you be the judge.

However, I should note a funny statistic. In January, Chavze was on the cover of that newspaper, 16 times, He was only on it 5 times in February, then it jumps to 13 in March, but only 7 in Abril (Easter week?), dropping to 7 in May, 9 in June (seven in the fist nine days) and 10 so far in July. The scant coverage in February and April is suspicious, but he still looked healthy. Recall Alo Presidente was cancelled half the time between January 1st and April 30th.

Chavez was on the news in early May until May 9th. , then he disappears and reappears with a crutch and the knee story. Note that the crutch disappear once he went to Cuba.

First, let’s set a benchmark, Chavez on Jan. 1st, 24th., 28th. and May 1st, all of which seem to be before they knew what he had.

Note in particular how huge he is on the third picture taken on Apr. 28th.

Then the “knee” problem begins and below you see two pictures, one in an appearance that I can’t pin down the exact date for (on the left), in which he showed up dressed in black and with a crutch. Then, on May 23d. he appeared in the “Balcon del Pueblo” (picture on the right) with a crutch. My take is that he had had a first “procedure” by then in Venezuela, maybe just a biopsy or radiation, but he already looks thinner than above, but it is not clear cut.

Then he shows up on June 1st. (Picture form the day before, below on the left) wearing the blue and white track suit and two days later (picture on the right below) he meets with Lula. He looks better, no crutch by then, as he gets ready to go to Ecuador, Brasil and Cuba:

The next picture is on June 9th. in Brazil (left picture below) and the next one arriving in Cuba (right picture below), meeting Raul Castro, on the night of June 9th. to 10th. according to my estimates:

Chavez then really disappears and we see him again in a picture in Gramma published on June 19th. on the right below. He seems thinner and we were shown a video of unspecified date (picture on the right below and the next frame too), where you can see him thinner, particularly his body:

In the picture below, from one of the videos, he is with his daughter and looks thin (on the left). Then, we do not hear from Chavez again for ten days, on June 28th. , when he gives a speech (below on the right), which he read and he was clearly wearing make up.

My suspicion is that the first video we saw was before the second operation, the change is huge between the two pictures above. They made the first video, Chavez got worse and they decided to show it to calm things down, but at the time he was really at his lowest point. The moment he recovered he gave the speech. The only thing that contradicts this is the date of the newspaper, but you all can see the difference.

We then don’t see him for six days, when he arrived in Venezuela and was clearly not as thin, but looked weak (picture on the left below).

The next picture supposedly was taken on July 6th., but my feeling is that it came from the early days in June, before the operations.

On July 10th. we were shown videos or pictures of Chavez watching the soccer game (below on the left) and with his father and mother (below on the right). Again looking better.

The next two pictures are from July 14th and 15th.

Below are the pictures yesterday on Friday July 15th. requesting permission to leave and today where he looks better, but the big shirt hides how much weight he has lost if you compare with the first four pictures above.

From these, it is my take that they did something to him in Caracas before he left for Ecuador, Brazil and Cuba, around May 9th. They hid this behind his supposed “knee” problem, but knew he had to go elsewhere and left for Cuba, via the other two countries to hide the problem. In Cuba, he underwent two operations. The pictures with the Castro brothers i after the first one and then the videos and his first are after the second one. He has said that he was in intensive care, clearly this was after the second operation, between the 19th. and the 29th.

The mystery is why two operations and why intensive care after the second one. Either he got an infection after the first one, or they found during the first procedure much more than they could deal with without being prepared for it.